While the Pound benefited yesterday from the news that the UK construction sector expanded for a fifth month in September, the Euro was able to recoup losses and advance on its British rival as the European Central Bank delivered a fairly neutral policy statement and the odds of a political meltdown in Italy declined.
The Euro/Pound Sterling pairing is currently trading in the region of 0.8385
As expected by economists, the ECB held rates at record-lows yesterday and President Mario Draghi kept comments dovish.
While holding off from implementing any additional easing at the present time, Draghi stated; ‘Real GDP growth in the second quarter was positive, after six quarters of negative output and growth, and confidence indicators up to September confirm the expected gradual improvement in economic activity from low levels. The overall improvements in financial markets seen since last summer appear to be gradually working their way through to the real economy.’
However, the main factor behind the Euro’s advance was Italian Prime Minister Enrico Letta winning a confidence vote in the Italian parliament, limiting the likelihood of the government collapsing.
With relative political stability returning to Italy the ongoing issues in the US were made even more apparent, and the Euro also rallied to an eight-month high against the ‘Greenback’.
Since the US government entered a partial shutdown the US Dollar has been feeling the pressure, and with no end to the situation in sight and the fiscal cliff looming the ‘Greenback’ may maintain a bearish relationship with its most traded rivals in the days ahead.
This morning the Euro received an additional boost in the form of positive German services PMI. The index showed the sharpest increase in service sector business activity since February of this year.
Further EUR/GBP movement could be triggered by UK services PMI. If this third, and most significant, gauge of sector growth also comes in below expectations, the Euro could consolidate its position.
Euro (EUR) Exchange Rates
As of 09:00
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3592 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8385 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4476 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6349 >
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.4040 >